Lloyds Banking Group Set Aside £750m in 2018 for Further PPI Claims

Lloyds Banking Group Set Aside £750m in 2018 for Further PPI Claims

Lloyds Banking Group announced that it will return up to £4bn to shareholders, despite adding to its payment protection insurance (PPI) bill last year. The banking giant displayed pre-tax profits of £5.96bn for 2018, up 13% compared with £5.28bn the previous year. Lloyds hiked the dividend by 5% to 3.21p per share and proposed a share buyback of up to £1.75bn, which represents a total return of up to £4bn to investors. Operating costs were comparatively steady in 2018 at £8.17bn and the company now assumes costs to be less than £8bn this year, which is 12 months ahead of its primary target.

The bank paid out £1.86bn to claimants in the year, it said. They have until 29 August to claim. Lloyds sold 16 million PPI policies since 2000 and has settled or set aside funds for 53% of them, it said. So far, £31.9bn has been paid out in compensation by UK lenders, with major banks having set aside another £10bn or so for future claims. Meanwhile, the group raised the facility for PPI costs by £750m last year, bringing the total amount provided by the bank to £19.4bn. Lloyds said the upturn was driven partially by a higher-than-expected number of grievances – 13,000 per week – and a jump in the average redress per complaint. However, analysts noted that with the limit for PPI claims coming up this August, the banks’ profits have been boosted as the warning of further costs diminishes.

“The UK economy has proven itself to be resilient, with record employment,” chief executive Antonio Horta-Osorio said in the statement, but warned: “The near-term outlook for the UK economy remains uncertain.” Net interest margin, which is the dissimilarity between what a bank pays depositors and charges borrowers and is an indicator of a bank’s effectiveness, rose from 2.86% to 2.93%. Through dividend payments and buying its own shares back from investors, the bank will pay out £4bn this year, it said. He said: “Over 2018 the UK economy has verified itself to be resilient, with record employment and sustained GDP (gross domestic product) growth. Although the near-term outlook for the UK economy remains indeterminate, our strategy continues to deliver for our customers. “I remain confident that, with our sole business model and market-leading efficiency, we can continue to increase investment in customer propositions and grow our leading digital bank, whilst at the same time bringing strong financial performance and market-leading returns.”

About Tracy Park 1552 Articles
Tracy Park oversees lower-level editorial positions including writers, proofreaders, copy editors and junior editors. He has a deep and thorough knowledge studied and researched by him in the tech and science sector. He is very active in social media and collects day-to-day information for the company. Due to his skills and ability to comprehend difficult situations through analytical skills, he managed to get a job at a local newspaper and now contributes analytical pieces for this publication on a regular basis. [tracy@newsindustry.us]

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